The Consumer Price Index (CPI) report, which was released by the U.S. Bureau of Labor Statistics on Tuesday, showed a 0.3% increase in January. After the announcement, the three main market indices fell, Treasury yields increased, and cryptocurrency assets dropped from their recent highs.
As January CPI Data Lets Wall Street Down, Stocks Drop and Crypto Slump
The cryptocurrency market saw drops, led by bitcoin (BTC), after the U.S. Bureau of Labor Statistics (BLS) released its CPI summary. These declines coincided with movements in the equity markets. The Consumer Price Index for All Urban Consumers (CPI-U) increased by 0.3% in January on a seasonally adjusted basis, following a 0.2% increase in December, according to the summary. Furthermore, before seasonal adjustments, it shows that the all-items index increased by 3.1% during the previous 12 months.
Wall Street’s hopes for a possible March federal funds rate reduction from the US Federal Reserve are dashed by this event. This basically means the central bank will need more data to analyze, according to Quincy Krosby, chief global strategist at LPL Financial, in remarks made to Jeff Cox of CNBC. For those who thought inflation would gradually decline and the Fed could start lowering rates sooner rather than later, the much awaited CPI report is a letdown, according to Krosby.
Further, the LPL Financial analyst stated:
The fact that all of the numbers were higher than anticipated ensures that the Fed will require more information before starting a cycle of rate cuts.
Dallas, Miami, and New York Have the Worst Inflation Issues, According to Wallethub Study
The Nasdaq Composite (IXIC), Standard & Poor’s 500 (S&P 500), and Dow Jones Industrial Average (DJIA) all saw decreases after the CPI data was released. The decline in the crypto economy was replicated, with bitcoin (BTC) going below the $50,000 threshold and the market plummeting 0.74% to $1.83 trillion. The price of a unit of Bitcoin was $48,659 as of 12:45 p.m. Eastern Time. A troy ounce of silver dropped in value by 2.5%, and the price of gold dropped by 1.24% per ounce. A report on some Metropolitan Statistical Areas (MSAs) in the United States that are struggling with excessive inflation was published by Wallethub on the same day as the BLS released the CPI summary.
Inflation rates are highest in Dallas, TX, Miami, FL, and New York, NY, according to Wallethub’s most recent analysis on inflation by city, which was based on data from the Consumer Price Index for the year that ended in 2017. On the other hand, Baltimore, MD, Phoenix, AZ, and Anchorage, AK have the lowest.
Other noteworthy cities with much greater inflation include Honolulu, HI, and Tampa, FL, which tied for fourth place. San Francisco, CA, and St. Louis, MO, report lower levels of concern. The report highlights the many economic factors that affect the 23 largest MSAs.
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